posted on 26 March 2016
by Rodger Malcolm Mitchell, www.nofica.com
Because economics is a social "science," it contains more bulls**t than a rodeo chute.
The latest example is called "secular stagnation," and wouldn't you know it, right in the middle is the amazing Larry Summers, about whom you can read by clicking the link.
Never heard of "secular stagnation"? Here is a description by Jacob Davidson, a news editor at Time Magazine:
Yes, secular stagnation is simple: Slow growth.
But why say, "slow growth," when you can give it the name, "secular stagnation," and sound like you know what you're talking about?
And why is that appropriate to today's situation? Do we have slow population growth? No, especially if we don't deport 11 million immigrants, who constitute 11 million consumers of goods and services.
Do we have lower speed of technological progress? Are you kidding? Technology has exploded in the last two decades.
The article continues:
The comparison between 1938 and 2016 is nuts, but suddenly, unexpectedly, it gets right to the heart of the matter:
And there it is: "High government spending during the conflict boosted the economy."
Could it be clearer or simpler? HIGH FEDERAL SPENDING - - > GROWING ECONOMY
Unfortunately, despite the obvious and undeniable experience of federal spending during WWII bringing us into prosperity, today's economists, politicians and media writers either don't get it or don't want to admit it.
No, it wasn't the bloodshed that stimulated the economy. It wasn't the destruction of entire nations. It was:
HIGH FEDERAL SPENDING - - > GROWING ECONOMY
There were jobs because the federal government paid for jobs. It wasn't even population growth. Millions of people left to serve overseas. It was, very simply: HIGH FEDERAL SPENDING - - > GROWING ECONOMY
And notice that the federal "debt" (i.e. deposits in T-security accounts) rose dramatically during WWII, and yet, miracle of miracles, the Monetarily Sovereign U.S. didn't default, and in fact, never missed a single payment on any financial obligation.
We learned all that. It happened right there in front of us. Federal spending grew a previously moribund economy and federal "debt" was no problem whatsoever.
So how the heck could we, today, be talking about reducing the deficit, reducing the debt and still not understand what is happening to us?
I'm not sure that "almost everyone agrees" or that low growth in "working-age" population is the problem. Aren't older people consumers? Tell that to the medical and vacation industries. Aren't children and teenagers consumers? Tell that to the clothing and entertainment industries.
But clearly a growing population does provide more consumers for economic growth.
And, as has become depressingly common, we again fail to learn from experience. Lying fearmongers stoke our xenophobia. We have made the immigration process more and more difficult, and the rabble rousers even wish to build a wall, embargo one whole religion and to deport 11 million consumers.
How then will we achieve population growth? Force everyone to take Viagra and ban all contraceptives?
Right. Humans have figured out how to grow an economy with so much human labor. All this proves is that lack of jobs is not a problem; lack of money is the problem.
Isn't the whole idea of progress supposed to include our having to work less and to spend more of our lives doing what pleases us?
What if the 40-hour-week became the 20-hour-week, and the federal government paid for many things you now personally must afford: Healthcare, education, transportation, etc? Isn't that where humanity should be heading?
According to Summers, our economy was better off without labor saving devices for business. For him, business was much better with hundreds of people sitting in a huge production line, hand screwing widgets.
Get it? Efficiency supposedly is a bad thing for economic growth.
Ah, witness the total departure of common sense from the "science of economics.
Thank you right wing politicians, who do everything possible to cut the incomes of the non-rich. Cut Social Security, cut Medicare, cut Medicaid, cut all poverty aids, cut aids to education: That how to stimulate the economy in the world of the right-wing.
When consumers pay credit card interest, where does that interest go? It goes to credit card companies, which employ people, and which use those interest payment to pay salaries.
If interest payment stay in the economy, they are not a drag on the economy. The only drag on the economy is dollars leaving the economy.
Not sure to what debt he refers - personal or federal. Federal debt is, as we have explained, beneficial to the economy.
Personal debt is the result of borrowing, which creates dollars. And, one man's debt is another man's assets. So, "high levels of debt" can be rephrased, "high levels of assets."
So there is too much debt and also too much savings? Could it get any sillier?
No, no, no, no, no. In the past, if the economy had too little investment and growth stalled, the federal government could simply increase deficit spending. Remember WWII.
But wait, is a light dawning?
Summers is right (!) about federal spending.
Calling Federal deficit spending a "crutch" for economic growth is like saying "food is a crutch for a child's growth."
Federal deficit spending is absolutely necessary for economic growth. It's a good and natural thing, not something to be avoided.
We have made the transition from silliness to madness. Now, increasing tax revenues, which takes dollars out of the economy, supposedly is good for the economy.
And this is the state of economics, today, where lies beget illogic, and the poor public pays the price.
You now may shower and try to wash away the massive BS you have experienced. My apologies.
THE RECESSION CLOCK
Recessions begin an average of 2 years after the blue line first dips below zero. A common phenomenon is for the line briefly to dip below zero, then rise above zero, before falling dramatically below zero. There was a brief dip below zero in 2015, followed by another dip - the familiar pre-recession pattern.
Recessions are cured by a rising red line.
Vertical gray bars mark recessions.
As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka "stimulus") is necessary for long-term economic growth.
•Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
•Any monetarily NON-sovereign government - be it city, county, state or nation - that runs an ongoing trade deficit, eventually will run out of money.
•The more federal budgets are cut and taxes increased, the weaker an economy becomes..
•No nation can tax itself into prosperity, nor grow without money growth.
•Cutting federal deficits to grow the economy is like applying leeches to cure anemia.
•A growing economy requires a growing supply of money (GDP = Federal Spending + Non-federal Spending + Net Exports)
•Deficit spending grows the supply of money
•The limit to federal deficit spending is an inflation that cannot be cured with interest rate control.
•The limit to non-federal deficit spending is the ability to borrow.
•Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.
•The single most important problem in economics is the Gap between rich and the rest..
•Austerity is the government's method for widening the Gap between rich and poor.
•Until the 99% understand the need for federal deficits, the upper 1% will rule.
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